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tv   C-SPAN2 Weekend  CSPAN  February 5, 2011 6:00am-7:00am EST

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in that report we identified 115 megahertz of spectrum we recommended to the fcc be made available for wireless broadband use now. this was a substantial and immediate down payment on the president's ten-year goal. we're currently working with other federal agencies to prioritize candidate spectrum bands for more detailed review on a rolling basis. this week we identified another 95 megahertz of spectrum, spectrum from 1755 to 1850 megahertz to be analyzed to determine if the band can be repurposed and made available for broadband use. we intend to complete the review of that band on the timetable called out in the plan which is by september. together with the 150 megahertz of fast track bands that we previously identified, and another 40 megahertz that was identified on the fast track report, we have now put about 250 megahertz of spectrum in the pipeline since the president
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announced the 500 megahertz goal. spectrum is a vital ingredient for innovation and growth in the communication sector and the economic vitality of the country as a whole. the work we're doing to identify additional spectrum is part of building the foundation for continued economic growth and we look forward to working with the private sector and the fcc to put more spectrum out there for commercial use. >> great, kathy. >> thanks, amy. good morning, everyone. i was rereading the long now, remember that book, and also new stats book, thinking in time, for another purpose. but as i was thinking about the spectrum issue this morning, i was thinking how much we have to really think in the long-term here. if you all had heard me about two years ago, i kept saying, you know, telecom 2000 was the plan that janis and tom put together way back first bush
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administration which set a framework for where we had to go for spectrum planning and for the kind of future that was foreseen then. and think about it, we actually do have hdtv. now it was tough. it was a tough road. and we actually did get the 700 megahertz and right now we're actually rolling out lte on that spectrum. and others of my colleagues here in the room have been able to get spectrum and put them to entirely new uses. well, in the last two years in my view the obama administration has, in fact, laid out the framework and, thank you, blair, and the work that was done in the broadband plan and, thank you, larry, for what i think ntia is doing. we now have a notion of what we need to do for the future. and it is probably a good time to stop and think about the long now and think about this future because just as i think back in whatever that was, 80, whatever,
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that you wrote that report, i don't think as smart as he that he actually thought about that iphone. i actually don't think he did. i don't know that we had invented those things at the time. i don't know that we actually understood what 3d television would look like at the time. maybe we did in science fiction, but we had to set government policy in order to anticipate things that we actually didn't know were going to happen. we just knew that if we had the right resources and the right input out there, in the marketplace, that in this american economy with the free enterprise system that we have that this was going to happen. so where are we now? it seems to me we're at the beginning of the next beginning. and that it is enormously important that we get it right here. i think the administration has wisely thought about creating market mechanisms for the going forward plan. that we really need to think
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about how to when the demand happens, the supply becomes available. and i think we have moved away from, i hope we're moving away from the notion that spectrum is this rare thing that once you get it, you keep it and it never, ever has another use. turns out that's not true. and so the challenge at this point is to come up with mechanisms that allow this sort of dynamic change in the marketplace happen under economic principles that makes sense and that allow for the invention of the future, even in the present. that's tough business. this is hard. so now we're trying to figure out what these incentive auctions ought to look like. i think this is hard work. i think that i personally don't think we're there yet. there are lots of pieces of this that have to work properly in order for these auctions to achieve the purpose for which
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they are -- they were -- the idea was invented. this and is that there are willing sellers and willing buyers and there is some sort of clearing way in order to make this get back -- this spectrum back into the market. we have a lot of work to do i've been interested in a long time for secondary markets more generally, which i think for the long term we really do need to think more deeply about. bill canard was the first chairman, i think i'm right on this, blair, that said we could do secondary markets and we could have a change of ownership leasing rights, whatever the heck it was. we know -- john mayo at georgetown did a good report on what happened over these last years and, in fact, there is a market for this stuff. what we have to figure out is how you get -- you can aggregate enough so that -- so that players in the market can get nationwide swaps on numerous
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perhaps transactions or maybe all at once in some sort of active marketplace so this can happen. finally i'll say to my friend david that whenever i go on like this, he says what about the little guys and he's right? there is lots of room in this market for new entrepreneurs, for big companies like my own, for folks -- for companies that have not yet been born. but we have to figure out the way that it happens in a marketplace so that we don't end up, and some of you in the room know, years and years and years in litigation that don't work thereby holding up that spectrum for good use over time. i think we have a big job ahead of us but i think we're well on our way. >> david. >> thank you. i'd like to talk about the impact of spectrum policy on minority wireless consumers and entrepreneurs. wireless broadband has a unique ability to provide a bridge to cross the well known digital divide as shown by the wireless
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adoption rates of minority consumers. ntia reported that in 2010 african-americans and hispanics trailed 20 percentage points behind whites in broadband adoption at home. minorities over index more in smart phone penetration. nielsen just reported that as of december 2010 31% of all mobile consumers in the united states owned smartphones but smartphone penetration was higher among minority groups, asian pacific islanders at 45%, hispanics, 45%, african-americans, 33%, only 27% of white mobile users reported owning a smartphone. minority wireless consumers are a huge and fast growing economic market. according to the target market news report the buying profile, the buying power of black america released two weeks ago, african-americans spent $9.4 billion on cellular phones and service in 2009 which was an
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increase of 30% from 2008. with respect to current spectrum policy, mtc has three specific recommendations that will help close the digital divide facing minorities as producers and consumers. first, we would like low power television stagtss to be aloud to participate in dtv intentive auctions. the bill is flowing around congress and ambiguous whether they would be. a handful of full power ssks tagss are minority owned anymore. 15% of low powers are minority owned. these are experienced entrepreneurs who produce compelling content that will be very useful in driving minority broadband adoption. second, we have asked the commission to authorize am radio stations to migrate to analog television channels 5 and 6 and be transformed into fm stations. fm sound you hear if you tune that way. two-thirds of minority owned radio stations are ams and most minority owned am stations are
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burdened with inferior technical facilities, historic legacy. the exodus would triple am stations' value. third, the commission should encourage consumers to conserve spectrum like they do any other finite resource. conservation impacts low income users likely to prefer a broadband service that may not have every bell and whistle, but it is affordable. that's why the metro pcs net neutrality dispute disturbs me and i've never met anyone who works for metro pcs, don't know much about the company, but i've read a lot and i'm pretty disturbed by what is happening to them. they're very small compared to at&t and verizon, they have offered discount pricing plans to attract those who want cellular service, but don't want spectrum intense applications like those offered by skype or netflix. they have also offered higher price data plans for those who wish to have those services, the same way car dealers offer to sell suvs as well as compacts. they're not blocking service.
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instead this is just engaging in classic price differentiation and connecting the underserved and low income consumers which they seem to be doing in a dignified way. unfortunately the company has been accused of violating the net neutrality fifth principle relating to network management this is just a textbook example of why from a civil rights standpoint not everything that you call net neutrality leads to network equality for minorities and the poor. and yesterday verizon announced a commendable network management approach, kathy does not know i'm going to say this, under which it will conserve spectrum by reducing threw put speeds for heavy data users there by preserving reliable and inexpensive service for the other 95% of us. congratulations. these examples underscore why transparency, well informed consumers and the shaming culture of the internet, those factors combined, fortunately render most internet regulation
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unnecessary or superfluous by avoiding regular lair overreach we concluded the commission could help free up the investment capital to be necessary to deploy the wireless spectrum needed so urgently by all consumers and especially minority consumers and the poor. >> blair? >> i'm just going to very quickly say that for those of you who heard commissioner baker, i pretty much agree with everything she said. i'm going to be very, very brief. i want to add that i want to publicly thank her and charles, her staff. it shouldn't surprise you since she and her staff helped write the chapter on spectrum in the national broadband plan. they don't necessarily have to say they agree with everything in that, but they had a tremendous influence on it and made it a lot smarter piece so i'm very grateful for that. let me add one other thing i think is relevant to the moment. there will be a big debate in congress about where -- how to allocate the d block, that's a
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good debate, i hope they have it. we had it internally. we came out in one place, the white house and members of congress have come out in a different place. that's perfectly fine. here is what should not be debatable. the worst use of spectrum is no use. it is a drag on the national economy that the d block has been sitting there unused, no one is investing in it, no one is building jobs on it, no one is creating service on it. that is a drag on the national economy. kathy and i think may be among the few chiefs of staff who have labored under a congressional deadline. i actually did it twice. in the '96 act and the broadband plan. i don't speak for her in this regard, but i will say that number one i did not like doing it and number two it was the best thing congress did. if we did not have a deadline for the broadband plan, i would still be there and it would be really bad. believe me, in dealing with the commissioners, the best thing i could possibly have. i think it is time for the fcc to give congress a deadline.
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and it should simply announce you have as much time as you need to make a very, you know, it is a hard decision on some level, but it is also very simple. you allocated to commercial, to public safety, it should not take more than a year or 18 months. that's how long it takes to actually do an auction so the fcc might as well start tomorrow. tomorrow is saturday. can't do that. monday and just say, we're going to start planning for commercial auction. that's the current law. if congress wishes to reallocate it differently, that's fine. but let's not get to a point where a year from now congress decides not to do it and then we have to wait aol yenother year half before an auction can be held. i would urge the fcc and congress, and, by the way, if you're a supporter of public safety, it is in your interest that that happen because that's the only way to get to that kind of state of urgency which would cause congress to actually act.
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>> always hard to follow blair. first, let me start by thanking amy and the free state foundation for the invitation to be here. i want to make three very quick points. the first is before getting into the details of the policy, it is worth maybe reflecting that one of the great achievements of the broadband plan is that we're talking about spectrum, that spectrum has been introduced in a major way into the national discourse. there is a presidential memo, the fact that in the state of the union this was mungs ention. whether we agree or disagree on specific policies, the fact we're having this debate, this discourse is good for the country if you believe, as i think everyone on this panel does and hopefully most of you do that spectrum is a critical part of national competitiveness. it is important for the country we get this right. second, i just observed that although i think a lot of attention last year of the fcc was on the open internet and comcast transaction there is a lost thing
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lot of things going on with spectrum over the last year, many of them as the result of the broadband plan and many thanks to those who have been working away hard to get things done and get things moving. i won't talk about these in detail, but we can in the questions but things like the spectrum dashboard, secondary markets, wcs, mss, white spaces, wireless back hold, the competition report, i could go on. there are many things, some of them have been through order, some on their way there, but many, many things the commission that have been moving over the last year on this front. i think the last point i'll make is going forward if we look forward, we would like to spend the next year taking many of these things to order and getting them done. we have three themes, i think, for 2011. the chairman said spectrum is a key agenda item for us. the themes for us going forward with spectrum, first repurposing, so incentive
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auctions are the means, whatever it takes to get spectrum to its best possible use. the second is the extension of mobile broadband, particularly to rural areas, tribal areas, areas underserved to the discussion this morning about universal service, making sure this is -- this key tool is universally available as possible around the country. and finally trying to examine how the fcc can respond to -- as kathy said, what is a paradigm shift in how spectrum is managed with respect to secondary markets, interference policies, trying to see how we can change the recalls, change the practices. we're making sure our rules track that and exploit that opportunity. >> couple of things. i agree with paul, it is great we're having this debate, but
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some of us have been having this debate for 20 years. and i think this is going to be a good year for spectrum. i think hopefully in the president's budget we'll foreshadow it in the state of the union. we'll see a comprehensive approach to spectrum reform, that will address things. not only the d block and that got a lot of attention and i want to quickly address blair's proposal, but also incentive auctions, reallocation, perhaps some specific bands, 1755 plus band is one that we're really interested in. and ntia has just announced a major priority to put that to stop that band. reallocation improvement, there are certain things that can be done to improve the act of 2004. we worked very extensively with federal agencies to do that and
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we have some ideas on that. there was a bill moving a bit, got traction last congress and hopefully that will be in there as well. mss spectrum, it is another one hanging out there, possibly the first application incentive auctions, charlie irgan owns all of it to get it done in the broadcast band. there are some things we can do. and frankly i find the budget factors, a lot of people wring their hands about that spectrum policy being made, you know, for budget reasons. my view of the history of spectrum reform is there are more good decisions made on spectrum policy grounds in the budget process than in the spectrum policy process. i don't view that as a -- as a -- well, they make market-based decisions. the government starts acting a little bit like how can we maximize the value to the country of this resource, which also maximizes, if you believe in market economies, the income
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to the government. on d block, and t-mobile has been very active in trying to preserve the d block as a commercial allocation. of course, we were disappointed in the administration's announcement, but, again, as blair said, that's fair game. we do think, and feel very strongly, actually, with what blair said, the worst possible situation is we come back here a year from now and we say, well that d block, i guess we'll have to argue about that for another year and, by the way, there are some real issues to be addressed by the fcc before that auction. i mean, you couldn't just auction it off right now. there are concepts and ideas and how this will work, how that will work, that will affect valuations that will affect the parties who are interested. we need to get on with that work. and those notices to initiate that proceeding as i understand it were written and ready to go early last summer, may/yjune tie frame and put on the shelf.
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in short order they could be updated. it is not an attempt to preempt the administration or congress. i would call on the administration to support the fcc in this. you would have a full year or maybe into next year, but a reasonable time for congress to act and if it doesn't, then at least the fcc is in a position to adopt some rules. you're still six months or more sometimes from the actual conduct of an auction. congress required the fcc to auction the d block in january of 2008. and three years passed, congressional deadlines, they might say, well, we tried to auction it and no one wanted to buy it under the rurals srules time and that was true. i don't think you get a definite pass. there is an implied obligation when congress says do this by this date, three years later you should start the process and get it under way. and then as i said, if congress reallocates it, that's fine. so we'll try to make lemonade
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out of those lemmeons. but we need to get the thing on. from a policy point of view and a company point of view, it is frustrating to see it hanging out there and not sure anything is going to happen with it. >> great. i think why don't we start with the d block since thofolks are talking about that. do you guys agree -- blair, you didn't agree it should be given away. but also if, in fact, they decide to do this, is blair right, should the fcc say we'll auction this off if nothing more than to just provoke congress to do something? >> well, what i've sort of propose to the fcc is they can do an auction with two scenarios. they have to write rules even if it is reallocated, public safety. what are the relationships between the public safety licensees and the other 700 commercial licensees and the fcc's broadband plan had some ideas in that regard. the other commercial licensees in the band didn't think much of
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the ideas so there will be controversy there. there will be rules that have it apply as to how to use the d block. the legislation talked about some sort of joint arrangements with commercial providers that are, you know, sort of described in very vague terms. so you have one path that says if it is not reallocated, we have to enact these sorts of rule and what should they be. and then one path, if it is reallocated, what should it be. will that be a little extra work because one of those paths isn't going to come true? yeah, it will be a little extra work but it is well worth the investment to get it under way. >> can i make the case for the urgency for this public safety network to actually happen. so i think there is an urgency in putting the spectrum to use. i think the administration, and much of the congress, i i thinks that we have got to make sure that public safety has what they need. now, let's remember what this is about.
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so ten years after 9/11 we still don't have interoperable network where it is not -- as much as i love my local police, it is not just about the local police talking to the local firemen, it is about local, state and federal officials being able to communicate with each other in the event of an attack. we seem to remember so quickly that we were attacked in three places on 9/11. and the ability to speak across jurisdictions was greatly hampered. this is a personal, like, thing with me that we're still here, we still don't have this done, and i think that the congress ought to get this done. it needs to -- it is going to reallocate it, let's get it reallocated. and i don't -- i don't doubt that there is work to do, even in a reallocation, by the way, and in fact the fcc's plan around how to then use this spectrum to make sure this --
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these network get built, because it will be -- i assume it will be a network of networks that is inoperable, that plan is a good plan. i think we need to move forward on that very quickly. i would like to see some urgency behind getting a public safety network done. >> so if anybody is going to do that work, paul, you're the guy. so what do you think? >> well, i think it would be -- it would be a mistake to assume that because we're not saying publicly no work is going on inside the building, both during the plan and subsequently people are working and thinking about different alternatives and what our responsibility would be under those. but i think, you know there clearly is momentum with the administration stepping in on one side of the debate, and for us, i think we're supportive to wait and see how that plays out. >> the next thing i would like to turn to is an issue that came up this week, it has come up before, but it was highlighted this week when the broadcaster put out a statement accusing time warner and some other spectrum holders of squatting on spectrum and not actually using
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it. i think it gets to this idea of there is at least some debate out there about whether there is a spectrum shortage and how do you know if there is a spectrum shortage because you're not sure who is using their spectrum right now. i wonder if everybody could sort of address that. how do we know there is a spectrum shortage if if we're not still sure who is using their spectrum? >> i think it is -- i think it is the wrong question. i think it is inevitable there will be a spectrum shortage at some point if more spectrum isn't brought in on the supply side. whether that's in -- whether it is in six months or three years or five years or seven years doesn't matter. it means it is a no regret sensible move to start putting spectrum to its best possible use, particularly given most of the areas where there is material spectrum, the lead time is several years to get it done. so i don't really think it matters at all. >> so is the fcc still work on a spectrum inventory or ntia, you
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were talking about doing that too, right? >> that's right. we are talking about doing that, right? >> that's right. we are working on a spectrum inventory. it's sort of a misnomer, we all know when the spectrum and the inventory is used for. the bills in congress really go to how much of that is really going to be transparent and readily available for the public to see, but we're -- we're above the 500 megahertz effort and the broader effort at the fcc is very much engaged in utilizing the spectrum in the most efficient way, and in order to do that you obviously have to know what the current uses are. we don't think that there's any question but that there is a need to make more spectrum available for commercial use. we're dealing in an environment which we're not going to change very much from a -- from a regulatory standpoint in that in this world five years is fast,
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and in order -- and in getting spectrum reallocated and -- and getting spectrum repurposed and moving existing uses out and bringing new uses in, so we don't think there's any question but that we have to be engaged, both us and the fcc now to make more spectrum available? >> could i -- could i use this, again, to talk about secondary markets. it seems to me we were much in favor of the inventory because the way we're going to understand whether there are folks who actually need to use something and whether there's that something to use is to know whether it's in the market, and this -- this whole argument about whether there's enough or not is a little bit beside the point. the point is on any particular business case there may be a need for spectrum to do x, y or z, and if he with the ability to understand where that spectrum is, right? good perfect information means a perfect market. no information means no market. we need the information out
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there so that the market can work, and then we will really understand and see, right, where these uses are workable. we then have to get into a flexible use kind of regime, in my view, in order for this to be successful, and then my radical idea from years ago, larry, was i think the federal government ought to be using a market-based way of actually allocating their spectrum in that if we were to get those principles embedded in the federal side as well, that might actually clear up some issues around whether there's a shortage and how this ought to be used for the highest and best purpose. >> when you talk about making spectrum available, as paul said, it's a question of timing. figure a year for the rule-making, a year for the court appeal, another year for the remand and another year for itu coordination plus another year as a fudge factor because
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everyone forgets there's an election. go five years into the future and look at what the projections are for how much demand there's going to be. no one doubts that after five years the answer is it's so large that we don't know how many seros are so the question then becomes what if we make a mistake? do we want to make the mistake erring on the side of let's not have enough, and then what happens is we're faced with a scarcity regime and we all know what happened with red lion and acbasher. we don't know that for this new opportunity for -- for economic growth. we just need to be sure that if we make a mistake we err on the side of abundance. >> i'd just follow up on that by saying the beginning of the dialogue within the broadband plan, we did a bunch of different kind of questions that would help us think about things, and the one question is what is the biggest risk to the
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broadband ecosystem in the united states in the year 2020? there's lots of different risks, right, a lot that we could not control, but one we could definitely control is if not year 2020 we are at a spectrum disadvantage in terms of the amount in the commercial marketplace relative to our competito competitors, it means that probably on the most important platform for the distribution of all kinds of goods and services, both the quality -- it's like having all of our roads have lots of potholes but also be toll roads. there's an extra cost and a diminution in value that would definitely hurt the economy, so we started looking for mechanisms so that the market itself can adjust, and what i found kind of amusing about the nab criticism of cable is that it didn't understand what we're talking about is enabling people to respond to the markets. it could well be that there's a technology that makes spectrum worth less. if so, incentive auctions take on a completely different character, you know. on the other hand, somebody invents something we haven't thought of that requires a lot more, so it's really exactly
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about what folks here have said. it's the timing of the thing and making sure that our economy is not hurt in ways we can't anticipate ten years from now. very quickly, it may be historically the best thing that reid and i got to work on or got to do was to have a date certain. the day we arrived at the fcc in 1993, the end of the digital television transition would have been 2023, and that was a soft deadline. if we had not insisted on a hard deadline, which then got moved back by a couple years, but the point was that's where 4g is going to be for the united states, but we had no idea that's what it was going to be. just knew there had to be a deadline so my theme of this panel is we need deadlines and we also need markets. >> i was just going to add that other countries around the world are allocating and assigning significant blocks of spectrum. germany, which is the home country for our parent company, last year auctioned off about
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350 megahertz of spectrum, and they did a big auction of their digital dividend, their broadcast spectrum, some 3g spectrum that was returned, and their 2.5 spectrum, and then some cats and dogs, but it add up to 350. the u.s. had really just sort of caught up with the rest of the world in about the last year or two in terms of total amount of spectrum allocated for commercial wireless, and now we're, you know, well behind again so we -- i mean, at least that's a sanity test, that it's not some sort of strange thing going on here. the other thing i'll add is that -- i mean, these devices that people carry around now, are just sucking up bandwidth and from a network management point of view talk to the ceo responsible for network, i mean, it's just really a challenge to keep up with the demand. he tells me that like three years ago when this was the sort of dominant smartphone thing, these things used 20, 30, 40
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megabitz a month and now our smartphones, an average on the users, a gigabit a month. that's more than an order of magnitude difference, so you build the networks and get the spectrum and the demand, you know, sort of -- you can call it a virtuous cycle sometimes, when the bandwidth is there they build the devices to use it and the app writers write the great apps that will work on it, but from a network point of view it's a vicious cycle because you can never really, you know, keep ahead of the demand so spectrum is a critical ingredient there. i will add though that our view on buildout requirements has changed as a result of some people not building out their spectrum as quickly perhaps as we would if it were on the market, so i realize -- in economic theory bill, requirements are not a good thing, but in practice we may support them. >> okay. so let's turn to -- let's turn to incentive auctions then. so if we're to assume that
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coming actually passes legislation that would allow the fcc to do incentive auctions what, should they look like? how would you actually set them up? if you were in charge of it, and paul, i guess you kind of are, but for everyone else what would you do? and it's open to the entire panel, yes. >> i'm going -- i'm going to listen. i'm tablinging notes. >> blair, would you like to start? >> i want to reiterate paul's point. there's a lot of work that's not apparent to the public about this stuff that's been going on while other parts of the commission we're dealing with, other issues that will remain nameless. we -- when we started kicking this around, incentive auctions with the bureau back in the ummer um -- the summer of '90, the great auction genius that came up with the multi-round simultaneous blah, blah, blah, i mean, the auctions that we did back for
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the "a" and "b" block in '95 and '94, the same guys were talking -- had a lot of really great ideas. i don't think the commission has yet gone public with them, and i'm not going to -- i'm not going to wreck that. i will just say that i have a high level of comfort that there are strategies using the most sophisticated nobel prize winning game theories that are nonetheless doable, achievable, i think would be very smart and, you know, depending on the economics will succeed, and if they don't succeed because the current economics mean that the value of the spectrum is not greater than the value of the ongoing enterprise of the alternative, well that's perfectly fine. i mean, that's the whole point, that it is the market. i mean, kind of -- the situation that we really want to avoid is the situation where somebody owns spectrum where the spectrum itself is worth way more than the value of that enterprise, even to that person, but there's
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no way to get benefit by giving it back. it's still more valuable to keep it. we don't want that situation in 2020, and that's -- but there are mechanisms to do that. >> david? >> one thing i would add, just to be -- the big focus is on the broadcast spectrum, but i think there should be general authority. as i indicated mss might be the initial application. there's no reason even to limit it to specific bands because there could be opportunities in areas we're not focusing on right now. i -- i was talking with evan corel who is the auction economist expert on auctions at the fcc, and he had an idea where the people who are offering their licenses sort of participate in a dutch auction where you start, you know, the very high price, sell here, sell here and that generates a supply curve and then the people who want to buy it, you know, bid up and that generates a demand curve and those two cross, voila. it looked great in theory, again. i didn't really internalize it,
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but ideas like that i think are very fruitful and we'd have to sort of work them through to see if they are doable. it may not be practically doable, but there are a lot of good, you know, smart people looking at that issue right now. >> david. >> we certainly have a lot invested in dtv. we brought the idea of settop vouchers to the commission. they adopted it. it worked, but now a few years later we realize, looking at these things as you have to every new year with a new set of eyes, that that spectrum, for the most part, not entirely, for the most part is going to be more valuable to the public if it's used for wireless. so the question that broadcast companies have raised is that's great if it's voluntary. it's another opportunity for us to monetize our as set, if we choose to, but how do you make sure that it's always going to be voluntary? the answer to that is you can't and shouldn't. the commission does have the ability to trot out section 304, remember, the rights to the ether, no squatters' rights.
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if it chooses to. it is a last resort, but the commission should never concede the possibility that should it be necessary to do so, it would -- it does have the ability and could as a last resort use it to get the spectrum repurposed in the national interest. >> kathy, do you have anything? >> i think i'm going to take that up. but i do think we want to -- i think to everyone's point here. if there are indeed mechanisms, smart ideas, i think we do have to start getting them on the table and cannedling them against actual business realities and figure out a way that buyers and sellers can actually get comfortable with what this might look like, so i'm hoping this is sort of next steps. let's start to real think about the details, and i assume there's more than one model, and i assume that -- that that's worthwhile getting them up on the white board, as i say, and starting to actually take a hard
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look, so -- >> you will see many more specific ideas coming out about how to exactly run this. it's obviously a very difficult thing to organize. >> very difficult, and i think we all have to start by saying it's not been done before and we have to figure it out. i think we want multiple ideas on the table or at least some discussion about what can be successful. >> that's right. once principle for us, you know, everyone thinks it's not talked about very much and part of the point of incentive auctions is to be able to share the proceeds to people voluntarily contributing spectrum. the other part is there's a value-add role for the auctioneer in the middle as far as creating contiguous blocks in the broadcast side, contiguous from a frequency perspective and contiguous from a geography perspective and not standing the huge value gap in the uses of the spectrum, there's a huge amount of value that can be add through the mechanism if the mechanism is designed properly
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to the spectrum that's going in before it's going out and i think part of our core design principle is figuring out how to maximize that. >> then i'm very concerned about the long now, if you will. we were so sure that the broadcasters would have five channels that they were going to build out, hdtv all over the entire universe and that this is what this stuff was going to be used for when we started way back when. well, you know, that's not what the market bears, and now we have to go through this entire wrenching sort of let's reallocate again because the market did something that wasn't anticipated. so as we think about this, i hope we're also thinking about the next thing and whether, in fact, we can keep the market dineic. >> if we're talking about auctioning off a lot of peck trum and our friends from at&t are also in the room, i also wanted to bring up the idea of spectrum caps. if you're going to auction off all the spectrum in the future,
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shouldn't you have caps in place to make sure that the verizons and at&ts in the world don't just buy it up so other smaller carriers can't increase their spectrum position? tom, you want to take this one. >> you want to guess what the answer is going to be? >> the spectrum cap order did not say that the commission would be indifferent to aggregation by major players in spectrum auctions or in mergers, and indeed in mergers, what it said was we want to get away from a hard and fast cap and evaluate this on a case-by-case basis. it does that in a merger. it does order divestitures and not usually too heavy but nonetheless the concept is there, and they have a screen and you go through it, and if you're over the screen you get a close look, and if it looks like it's too much spectrum, they will be order to sell off some of the licenses. it hasn't done that case-by-case
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approach yet in the auction context, and frankly i think going forward it should, because first of all, some would do so and secondly on a case-by-case basis there may be reasons you want aggregation limits. in the engineer american auction, our parent company was one of the incumbents and the german regulators limited t-mobile germany and vodafone, who are the two largest in terms of the amount of lower band spectrum in their version of 700 megahertz they could get because it didn't want it to buy it all and it left some of it for others, so some things like that are possible. i couldn't address exactly what they should be, and the rules would have to be adopted before the auction. in theory part of that sort of suggested, well, we could look at who wins it and then decide but trying to undo an auction after it's over would just be a terrible mess. so i think that has to be on the table, but, again, i don't know that it would support a version of the spectrum cap which said
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this number and no more, you know, a priory. >> kathy, i assume you're not going to want that on the table. >> one, i learned my spectrum theory from blair and reed and the whole idea was that you create a market so that there are players that can make the best and heist use and actually build stuff and have the ability to do that are the ones that win these things and have been very successful theory. two, i think it was tom and i who worked on taking the spectrum caps off with just the theory that tom laid out, that there is existing law as to constitution, but i find this very interesting, too, because what -- what should it be concentration of and about in a marketplace? and i think we -- we don't have this right. we just don't have it right. so i think we have to rethink what it is we're worrying about in terms of any sort of competition issues, and, third, it just seems way premature to be talking about it.
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>> david? >> well, there's another aspect to this and that is since 1993 congress has wanted the commission to promote small business ownership. it's recognized that from small businesses and including minority and women-owned businesses, innovation often flows, and the mechanism that it set up was designated entities. until 2006 when the commission changed those rules, designated entities were doing fairly well in these auctions and then among rules that changed, one, it said if you change ownership within ten years after you get the spectrum, you have to discourage, no one writes a business plan that says you can't sell the company in ten years, so not surprisingly designated entity participation in auctions after that went close to zero. those decisions reversed by the court recently and it's on remand. if the commission were able to restore a meaningful opportunity
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for designated entities, small businesses, innovative businesses to participate in and get a foothold in spectrum and trying new ideas, we probably wouldn't need spectrum caps. >> paul, what's the fcc perspective on this? >> i'm not sure i can speak for the fcc. i'll tell you my perspective on it. i think the debate by spectrum caps, at least as i've observed, is entirely predictable. where everyone stands is really obvious and you don't need a two-hour discussion to decide it. bad decisions made in previous auctions and then you shouldn't compensate them for that. people talk about foreclosure value, if you have a lot of spectrum, there's some value in foreclosing your competitors from getting more. people talk about competition policy. i think these are all important factors to consider, but would i agree with tom and kathy both, right, which is that i think the dominant factor is how big is the pie, right? there's a big difference between having a discussion on spectrum
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caps in ten megahertz versus spectrum caps when you're thinking about 100 megahertz so it's a people tomb discussion to have in the abstract amusing though it is, it's probably more to think about it in the context of specific auctions when we have a better sense of what the supply side looks like. >> okay. so i have one more question and then i'm going to open up the questions and there's microphones on either side so if you want to start lining up. one more up here though i have other questions if no one has anything out there. larry, you've gotten off pretty easy. it would remiss of me not to ask about the little swath of spectrum saying that you think d.o.d. might want to give back so it can be auctioned off. can you talk about the response you've been getting from other government agencies about reusing the spectrum. >> you're killing me, it's 95 megahertz so it's not at little swath. it's a significant swath. we, along with the cc,
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identified in the plan 2,200 megahertz of spectrum, either for -- that would be shared commercial and government or possibly reallocated from commercial to other commercial uses or from government to commercial use, and when we did -- when we did the plan we realized that if we tried to analyze each of those bands simultaneously, we'd spend ten years analyzing things and not make any spectrum available, so we decided we needed to prioritize, and we looked at -- we looked at a variety of bands, and basically what we're searching for are bands where there was a large contiguous block, where there was favorable international allocations, where there was existing wireless technology so we weren't talking about r & d on the commercial side, where the location of the band from the technical perspective, it was low enough so that it was valuable -- valuable on the commercial side, and then from the government
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side, what's the cost to reallocate, and are there bands where you could move existing federal operations? because from the federal side it's not a question of preserving spectrum. it's a question of preserving federal capabilities and operations, so when you combined all that together, this was a logical ban to look at, and there was a great deal of consensus about doing that, including -- including from federal agencies who are incumbents in the band. that process is starting now. it will take until september. it's very complicated because not only do you decide -- you have to figure out really what's the relocation plan? where would folks go, and what would it cost to get them there, and in the current budget environment, i think the chief concern, beyond preserving capabilities is where's the money going to come from now to
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do the planning and the pre-move work that needs to be done? so that will all take place between now and september. >> so have you heard back from d.o.d. yet about this, or is that part of the comment process, or how does that work? >> well, d.o.d. was part of the decision process. the decision process was a recommendation from the policy and planning steering group, an integration group that d.o.d. is part of it and they agreed with other incumbents in the ban, doj and others, that this band should be part of the move. the industry was really most interested in the bottom 25 megahertz of this band for possible pairing with aws, but we decided collective that it made sense to look at the entire band, because what we didn't want to do is move people out of the bottom -- move agencies out of the bottom 25 megahertz of it and then decide, hmm, the next logical place to go in terms of
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additional spectrum is -- is in the adjacent band, and then we have to go through the time, energy and expense of moving people again, so there was a lot of support for doing the entire 95 megahertz at once. >> okay. paul kirby, you also ask about questions so i'll give it over to him. >> i'm paul kirby with dr daily. that's what happened when the made the change from 1710 to 1755. some went from 1755 to 1850 and it clog that had up. you said we've made "x" numbers. the 115 is in the pipeline but the 95 is not in the pipeline. it's under for consideration. >> when i say it's in the pipeline, it's things that we are looking at. the 115 is done from our perspective. there's -- there was an additional 40 megahertz, from 4,200 to 4,400, that we all said basically we couldn't do within five years because it required international action, and that's also in the works, so this is something that, yes, it's not -- it's not reallocated, but it's
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something that we're looking at. >> so the 40 you see is kind of done, pending itu and other. you're waiting -- i mean, you need the next wart to make the next 40 available. >> yes, and there's also some question of what the actual use of radar -- of radar otimeters are in that band that we're still looking at. we decided we need to go ahead with the work process that is so long and so infrequent that if you miss the deadline you're set back another four years. >> is there any idea to have public workshops or anything like that as you look at the 1,755 to 1,850? >> we're still developing what we're going to do in that respect. >> sure. >> michigan state university. the european commission has a number of programs that we run under the rubric of transeurope networks, transeurope network
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for transportation, transeurope network for energy and, of course, transeurope network for telecommunications. i'd like to hear from paul or larry whether you all deal with the european commission on this, on these matters, and whether there are any lessons learned from europe on procedures or substantive issues that we need to either adopt or avoid? >> i mean, i can say that we certainly do. we -- we meet with the europeans frequently, both at sort of more informal itu-type settings and we had a meeting just before christmas with the chairman. we have dialogue with the europeans. they have best practices that can be shared and lessons learned both ways, but, you know, one of the perils always i think of trying to import little bits of policy from one country
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to another country you is miss the entire sort of structural context in terms of industry structure, consumer behavior, pricing, regulatory regime that is sort of the foundation of the little pieces so it makes it kind of difficult so if i think about the transeuropean networks, for example, a lot of the motivation for those in general was to unify the different countries in the european union and try and, you know, make the european union regulatory framework more attractable. that's not really such a relevant problem for us. on the other hand, you know, there are certainly lessons with respect to how they deal with the companies and how they think about the incentives for the next generation networks that are relevant and many of the things that we're doing, you know, the broadband plan, for example, that the europeans put out their diversion soon thereafter with very similar goals. >> yeah. would i just add to that, on the administration side, there is a constant dialogue, both at a formal level but frankly also at a very informal level as well
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and an interchange of ideas that's very useful, i think, on -- on both continents. >> i guess i wanted to get back to the "d" block because i was really intrigued by the discussion and the suggestion of maybe some kind of deadline to deal with that. i just had kind of two quick questions. one was are we sort of headed towards a stalemate here because it seems like we have all the ingredients of stalemate with congress, parts of congress pulling in different directions and, you know, the fcc and the administration sort of maybe in a slightly different place right now, and then secondly i was just wondering is it at all clear that -- that the -- that the fcc's proposal, which would be, you know, the public safety would get the spectrum, would be able to use the spectrum it already has for broadband plus using other carriers' networks,
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that that solution won't work and that in fact public safety definitely needs the d-block, because there are some who say they really haven't built a strong case for that yet. >> larry, you want to take that one? >> as to the first question on the stalemate, you know, you can place your odds, but the point is about the deadline is that a deadline both for -- forces action and, you know, you've got to give reasonable time. but whether you think there will be or won't be a deadline is a good idea, right? there's no harm to a deadline, and there's a lot of benefit to it. as to the fundamental question about allocation, i think what you pointed to is the analysis that we ultimately came down to which is that -- these things are all a combination of a lot of different inputs and, you know, to -- to way, way, way overgeneralize our view is what public safety needs is not more spectrum, but they need money. auction spectrum, give them the money.
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but there's definitely things they can do if they have more spectrum. it's reasonable to say if we're going to get a whole bunch of more spectrum somewhere else that's going to be auctioned, take the money from that and give the public safety, you know, once in a generation thing, these are all judgment calls, a classical decision and businesses do it all the time. i'm sure kathy's company, the wire guys and wireless guys are argue begun it so, yeah, we came out in a different place but that's not -- but that's perspectly reasonable and perfectly reasonable to come out in a place we came out. again, what i think is not reasonable is to say that there's some reason we shouldn't at some point say, okay, if congress hasn't acted by this date, then we're just going to go ahead with the commercial auction. >> david? >> i just want to add on the first point i think it is good to have a deadline, and if -- and if presented properly, it wouldn't be a hostile act, you know. it might even be a friendly act.
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that would become hostile very quickly. and probably to say -- the same with me. i will say, and -- and, you know, this is sort of a compliment to blair and to his team, but i thought that the public safety broadband network plan in the broadband plan, the national broadband plan, was just a terrific piece of work, and that's not just because we want the d-block to be -- to be auctions. in fact, at that time it was assumed that it was going to be auctioned and allocated and that's what the plan was based on, that assumption, but it addressed the technical points. it addressed capacity. it addressed cost and tried to, you know, and have solutions in each area. in our case we've had, you know, good success doing fetwork sharing on the commercial side. for a long time we had a joint venture with the company called singular then, and to provide service in new york and
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california, two major markets, and it was with one radio network and two back ends, it split very quickly, and it was very efficient. we essentially shared the spectrum, shared the rf equipment, shared the cell sites, and it -- it went away when singular acquired at&t and didn't need it anymore and decided for strategic reasons they wanted to take it down, but those models would work very well. we've spent, you know, a fair amount of money researching this. we've got some very credible people who put papers in on how priority access works under lte and right -- you know, it's frustrating because right now it's -- the debate isn't about that. it's not about -- it's sort of more we want the spectrum and, you know, we're going to get it, and so some of the things i'll just say, there are more efficient ways to build public safety networks. new york city put a paper in that showed it had 250 sites to cover the five boroughs. we have type times that.
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skies cost money and sites aren't free. you've got to spend a lot of capital lobby, but it's free in terms of dollars. to us spectrum sites cost so i would suggest we do a more rational allocation between the two, and we have a much denser architecture than public safety does because also we have more users on it. i mean, total public safety is what, 3 million tops, 4 million? it's -- it's -- you know, we have 34 million. the industry has about almost 300 million subscribers. actually i asked one of my staff, the president announced the goal of 98% wireless broadband coverage by 2016, and i -- i think the last fcc competition report said that 98.1% of the population has at least one wireless broadband provider so we won. we did it. >> david? >> the possible for this to get bogged down and take forever


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